A Labour backbencher has issued a stark warning that the upcoming Budget could derail the UK's ambitions to build a rival to Silicon Valley and push entrepreneurs to seek investment overseas.
Cross-party concern over funding 'valley of death'
Sarah Edwards, a Labour MP serving on the business and trade committee, has added her voice to industry leaders and the left-leaning Good Growth Foundation. In an open letter to Chancellor Rachel Reeves, she argued that addressing the funding 'valley of death' – the critical stage where start-ups struggle to secure scale-up finance – must be a central growth priority.
The letter, organised by Good Growth Foundation director Praful Nargund, points to inadequate economic incentives and a structural failure in the UK's investment climate. It states that this market failure worsens regional inequality by preventing local research excellence from translating into local jobs and prosperity.
Calls to bin the Enterprise Investment Scheme
The letter, first reported by The Telegraph and signed by figures including Joe Jervis of Labour Renaissance and SME4Labour leaders, joins growing demands to scrap the current Enterprise Investment Scheme (EIS).
It argues the scheme does not send the powerful market signal necessary to channel capital effectively or to retain and grow UK-based companies.
The proposed replacement is a new regime costing £650m that would offer more generous tax breaks and reliefs. The goal is to incentivise entrepreneurs to build and keep their businesses in Britain.
Government considers wider reforms
The signatories collectively urged the government to prioritise support for the hard grafters behind these businesses – the engines of aspiration, pride and opportunity in every corner of the country.
This pressure aligns with reports that the government is indeed planning tax breaks for start-ups in the Budget to boost productivity. Furthermore, Keir Starmer's business adviser, Varun Chandra, with his venture capital background, has been lobbying for reforms to back British entrepreneurs.
Separately, The Entrepreneurs Network has called for changes to visa rules for high-potential individuals and a reduction in the cost burdens of starting a business. The government is reportedly considering reforming the Global Talent visa to an invitation-based process, similar to a scheme in Australia, though such changes are not expected until next year.
